The Van Trump Report

“Fat” is All the Rage in US Dairy Industry

Fat may be a four-letter-word in dieting circles but it’s all the rage in the diary industry. Average milkfat above 4% has become the new normal in recent years and increasing demand could push levels even higher than today’s record levels.

The fat found in milk, known as “butterfat,” is what gives dairy products their creamy texture and rich taste. Butter, for instance, is almost entirely fat (at least 80% in the US), versus whipping cream at around 36% and whole milk with only about 3.5% butterfat. It’s also essential for cheese making, with butterfat content ranging anywhere from 20% to as much as 87% for typical full fat varieties.

Americans’ per capita dairy consumption has been on a decades-long climb after plunging hard in previous years. Starting in the 1950s, scientists began examining links between high fat diets and an epidemic of heart disease among relatively healthy middle-aged American men. While the original low-fat diet was initially only recommended for high-risk cardiac patients, by the late 1970s, “fat” had nonetheless become the ultimate dietary evil and a low-fat diet was considered the ideal for a healthy lifestyle.

U.S. per capita dairy consumption was 539 pounds in 1975, when records were first established. Fast forward to 2022 (most recent records), consumption climbed to 653 pounds per person, down slightly from a record 667 pounds set in 2021. Overall, USDA data show American dairy per capita consumption in 2022 up +0.4% over the past five years, +7.5% over the past 15 years, and +16.1% over the past 30 years.

Among the products driving dairy growth is cheese. In fact, US consumers ate a record amount of the stuff in 2022, with consumption averaging a whopping 42 pounds per person, nearly double the average of 21.9 pounds in 1980. Cheese alone consumed nearly 61% of the US butterfat supply in 2021 versus just 38% in 2000. Yogurt and butter have also experienced very strong growth. The demand is not just at home, either. Fat-rich dairy products are also enjoying robust export demand, leaping nearly +24% in 2022.

By contrast, the popularity of good old fashioned milk has been on a two-decades long decline now, reaching a new low in 2022 of just 130 pounds per person, compared to 192 pounds in 2001 and a peak of 384 pounds in 1945. Fluid milk accounted for only 10.6% of the nation’s milk fat supply in 2022 versus just over 18% in 2000.

Dairy farmers have obviously recognized the trends and in turn been trying to increase the levels of the industry’s key driver. In 2022, the average amount of butterfat produced by America’s dairy herd was a record high 4.08%. By comparison, from 1966 to 2010, butterfat levels in US milk averaged between 3.65% to 3.69% as the low-fat diet trend still prevailed.

The industry has managed this thanks in part to improved feed formulations. The biggest driver, however, is likely improved genetic selection for milk fat production. A genomic test can reveal 70% of the genetic ability of a young calf years before it becomes a milk cow. This has in turn helped to speed up genetic gains.

Industry experts say there is still room to increase US butterfat production further as we remain a milk-fat-deficit nation. Even as US milk fat production climbed +27% from 2011 to 2022, butterfat imports still soared by more than +120%. According to the USDA, the US imported 287.7 million pounds of milkfat in 2022 versus 130.4 million pounds 2011. (Sources: International Dairy Foods Association, CoBank)

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